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The IMAX Rises

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It is without a doubt that many of you have watched The Dark Knight Rises. It has surpassed the $100M global box office in 557 IMAX theatres worldwide after its 7th week of release. IMAX theatres contributed about 10% of The Dark Knight Rises’ total worldwide gross box office. Despite of the shocking shooting at Aurora premiere, The Dark Knight Rises still has made itself the best all time 2-D opening in history. Christopher Nolan is the first director to use IMAX (IMAX) cameras in such a Hollywood blockbuster. We probably won’t see IMAX cameras becoming a standard format for most films due to the high cost associated with the using of the 70mm IMAX cameras, however, we will see the trend of more famous directors, such as Nolan, employ the use of the IMAX cameras.

Next year, we will have a new Star Trek movie, Star Trek Into Darkness, which will be partially shot with IMAX cameras. Hunger Games: Catching Fire, which will be released November next year, will also be shot with IMAX cameras. The famous Steven Spielberg, who has never shot a feature film using IMAX cameras, is now considering using IMAX cameras for Robopocalypse. In addition, we also have The Hobbit trilogy in IMAX format and not to mention that James Cameron’s Avatar 2 and Avatar 3, which are also to be digitally remasterd into IMAX format for sure.

According to Boxofficemojo.com, foreign market contributed about 58.3% of the total gross box office for The Dark Knight Rises. For the new spider-man movie, The Amazing Spider-Man, its foreign market box office contributed 65% of the total gross box office. In addition to the larger domestic network, the international market is, nonetheless, also a vital part of the IMAX box office. The international popularity is the reason why big theatre owners keep signing contracts with IMAX. IMAX needs to build more theatres internationally to cover the untouched audiences.

The biggest Chinese theatre company, Wanda, just acquired AMC Theatres for 2.6B dollars. Wanda now is the largest cinema owner in the world. It’s not a surprise that Wanda will install more IMAX theatres in the future since the boss Wang Jian Lin expressed his ambition to make more acquisitions in the future. IMAX and Chinese filmmaker HuaYi Bros just signed a new partnership deal to bring more Chinese movies into IMAX theatres. Hollywood moviemakers are bringing Chinese elements to attract more Chinese audiences into the theatres because it will make the movies culturally acceptable. More importantly, these films will be categorized as “co-production” movies, which regulations indicate Hollywood will be able to take up to 43%-45% of the total box office, as compared to 25% if it isn’t. The new Iron Man movie, Iron Man 3 has a few famous Chinese casting crews on the list, and if it’s lucky enough, it will be imported into China as a “co-production” movie.

IMAX has been using Joint Ventures business model starting a few years back, this business strategy splits the operating cost from movie theatres and brings more revenue for IMAX. Unfortunately, this strategy will have a relatively high fixed cost at the beginning. We will know that fixed cost will only impact the business in the short-term. When the theatre network is large enough, new installations will only make a minor impact on the income statement.

Just like Marvel and Disney (DIS), IMAX can invest in movies as well. Marvel owns copyrights and intellectual properties of many superheroes. IMAX, on the other hand, owns a large theatre network worldwide. IMAX is able to figure out where big screens are more popular and which movie genre on IMAX had big times. This crucial advantage may help IMAX to invest in potential blockbusters. There are few movies filmed by IMAX cameras every year, these movies are the potential targets to do co-productions. This strategy will not only provide extra opportunities to have the IMAX brand name implanted, but also grabbing more revenue from these movies.

IMAX can even have its private equity fund for better leverage. China does not allow financial derivatives in banking system whatsoever, nevertheless, the fund market is booming right now. There are funds specifically for movies. IMAX right now has no any production or investment plans but it’s not a bad idea to raise fund from the rich Chinese and invest in Hollywood movies. After all, it is a win-win situation.